Question

Here is a simple example. The inhabitants of a small island begin exporting beautiful cloth made from a rare plant that grows only on their island. Seeing how popular the small quantity that they export has been, they steadily raise their prices. A clothing maker from New York, thinking that he can save money by "cutting out the middleman," decides to travel to the small island and buy the cloth himself. Ignorant of the local custom of offering strangers outrageous prices and then negotiating down, the clothing maker accepts (much to everyone's surpise) the initial price of 400 tepizes/m2. The price of this cloth in New York is 120 dollars/yard2.

Answer 1